updated 11:30 am EDT, Mon September 27, 2010

Nielsen warns of cooling digital music business

Online music sales have leveled off in the course of the past year, Nielsen said today. Sales and subscriptions at iTunes, Amazon MP3 and other American stores in the first half of 2010 were roughly similar to a similar part of 2009 compared to a 13 percent increase the year before and a 28 percent jump in 2008. The researchers didn't have a direct explanation but suspected that disenchantment with the music on sale, as well as economic difficulties and a confusion of sources, contributed to the effect.

The researchers also dampened hopes that subscription services like Rhapsody or Zune Pass would gain traction, as the lead still went primarily to pay-per-track stores such as iTunes. Mobile services were gaining a small amount of ground, but a significant number of desktop listeners were using YouTube for single tracks rather than paying for the downloads.

Stalled US sales were considered unusual and weren't necessarily proof that they wouldn't eventually replace CDs, Nielsen said. The study group pointed to Europe, where digital music still grew seven percent in the UK, 13 percent in Germany and 19 percent in France. These areas were relatively late to per-track sales but also have had services like Spotify that theoretically hurt music revenue by encouraging free, ad-based music instead of paying. Spotify has yet to land a US deal and has been resisted by labels that believe it would devalue music.

Apple is still thought to have the largest share of domestic music with 28 percent of all sales, making a large part of any slowdown its responsibility. It just this month launched its Ping social component for iTunes to help listeners find music they wouldn't otherwise discover and buy. [viaReuters]

Elephant in the room

The price of a song was $1. In spring of 2009, that price went up by 30% (for most of high sales volume songs).

It is incredible how music industry labels will refuse to acknowledge their mistake (fueled by greed) and the fact that Apple was right. They were making more money when they were selling them at $1 then now. Who knew...? Obviously, Steve, because he kept telling them from the beginning. $1 (actually, $0.99) is the magical number. Anything higher, and the fish don't bite.

Agree...

This is as much as anything an indication that the (dominant) $1.29 pricing increase has not sat well w/ consumers, in my opinion. I agree that there's a lot of cruddy music being released these days too as there seems to be no major influence occurring in the music world.

But I for one, will at least go to the trouble of checking Amazon's site to see if it's .99¢ and if I feel like, buy it there. Rarely have I seen the worth in paying an extra .30¢ for a song.

And don't even mention the ominous pirate world that continues to thrive w/ bonehead moves like this price increase from the music idiots. "Cutting off the nose to spite the face", right?!

enough

Re: Elephant in the room

It is incredible how music industry labels will refuse to acknowledge their mistake (fueled by greed) and the fact that Apple was right.

And how are you proving Apple was right? Do you have the analysis that says growth would have continued this year if prices did not increase? Or is it "Well, it was up before, now it's not, so it must be that!".

And what explains last year's dip from 28% down to 13% growth? Is that all music price? Or could the economy have something to do with it?

They were making more money when they were selling them at $1 then now. Who knew...?

You need to return to 3rd grade to retake math.

If sales are the same, but the average price has increased (lets just say average price is splitting the difference, $1.15), how can they be making LESS money now? They'd be making more money per sale (15 cents more) than last year. Simple math.

Now, if you go by your analysis that sales would still be going up, they'd have to grow more (15 percent in my example) just to make the same amount of money they made this year. Which is more than they did last year for that quarter. More simple math.

Apparently you feel that they need to sell to as many people as possible, as opposed to maximizing their profit (market share over revenues). So, do you feel the same way about Apple's products vs. the PC market? For most people seem to like Apple's profit direction more than a concern over market share.

Obviously, Steve, because he kept telling them from the beginning. $1 (actually, $0.99) is the magical number. Anything higher, and the fish don't bite.

Yes, Steve loves telling people how much they should sell their product for.

And since when does inflation not exist such that over 10 years the price stays the same?

and...

Sales and subscriptions at iTunes, Amazon MP3 and other American stores in the first half of 2010 were roughly similar to a similar part of 2009

OK. How were CD sales during this time? If they're done 20 percent over the year, would that not indicate it is more an overall music issue than just "those damn greedy labels!"?

Apple is still thought to have the largest share of domestic music with 28 percent of all sales, making a large part of any slowdown its responsibility.

Sorry, but that's mixing two different numbers. Apple's domestic music share is 'overall' music sales. The drop is in digital music sales. You should be pointing out their digital percentage and then blaming Apple.

It just this month launched its Ping social component for iTunes to help listeners find music they wouldn't otherwise discover and buy.

Isn't that what the 'genius' was supposed to do? For that would actually point people to music they never heard of. Ping is only going to point you to music you've never heard of if you're 'following' someone whose opinion you value. And, at that point, you would already be hearing about these artists without Ping (by, I don't know, talking to them, listening to a Podcast, reading a blog, following them on Facebook or Twitter, or any of 18 billion other ways people hear about things).

Re: Elephant in the room

BTW, vasic, these are just sales of 'singles'. With album sales, growth was 5%. Depending on the artist, this either means the customer actually gets to experience all the music of an artist, not just the 'hits', or got conned into buying a whole album instead of just the hits because the prices were closer. Either way, it's even more money to the labels.

Both end up helping the consumer in the end, since they may discover they really like an artist and decide to buy up their other albums to fill their collections, or realize the artist is a hack with one or two good songs and mostly c***, and thus can stop buying songs of them.